Friday, September 22nd, 2017

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Why would anyone sell stocks when they are cheap or buy stocks when they are high?


I am new to the stock market and going to do some swing trading. The idea is to buy at the bottom and sell at the top. But this makes me wonder: why would anyone buy from you when it is at the top of a peak and sell to you when it is at the bottom. Will my orders be successful or not?

Related Reading:

Swing and Day Trading: Evolution of a Trader (Wiley Trading)Swing and Day Trading: Evolution of a Trader (Wiley Trading)


6 Responses to “Why would anyone sell stocks when they are cheap or buy stocks when they are high?”
  1. Jim L says:

    How does one know where the bottom price or the peak price is? That is the problem. Stock prices are relative over time – is Google low now, or high? You would need to be a fortune teller to know.

  2. gosh137 says:

    Because a lot of new investors buy and sell based on emotion, not reason. They think what has happened in the recent past will continue. They see a stock price rise, and without looking at the fundamentals, financial facts (very high price to earnings, sales, book, etc ratios), their emotions say “I missed some of this great rise, and don’t want to miss the rest, I better buy now.
    Same with the bottom. This thing has been falling for 6 months. I should have sold at least 3 or 4 months ago when the price was higher. I don’t want to get wiped out. I better sell now.

  3. Peter B says:

    The simple answer is to convert the shares into cash.

    Usually, when one is buying shares, one does not know that the share has peaked. One expects the share to go higher (and often it does, especially in a bull market). Why would someone sell while the stock is still on the rise? Because one wants to take the profit to that point.

    Most strategies look for signals of some form; something just after a peak is a good time to sell, because one want to avoid losing money (especially when one is only losing a little of the profit.

    Good luck! But you need to understand the stock market far more thoroughly that you appear to at the moment.

  4. Jerry S says:

    good question, answer, fear, emotion. most newcomers to the stock market buy a stock
    when things look good and sell when they get scared, thus my answer to a truly good

  5. HillClimber says:

    Because no one knows when they are cheap and no one knows when they are high. Buy cheap – sell high is both a bad joke and the truth. The joke is, like your question suggests, that it is not that easy. The truth is you try to buy low and you try to sell high.

    Look backward at how the market went up to peaks and down to valleys. Read the old news stories to find out why it went down and why it went up. Now look where the market is today and read all the news stories about what people are saying for this coming year. Doing good research and being patient to both buy and sell means you will probably buy close to low and sell close to high.

    We don’t know what orders you have bought. But not letting fear scare you out is important. Sometimes the stock we buy goes below that buy price. Then we need to think about the long run and be patient.

    Study things well. Best wishes.

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